I am confused. If the point of Skype is to see them and they see you in real time, if the Lumia 635 does not have a front facing camera, how is that useful? And why does it come installed when you can't really do what it's kind made to do?

Skype can be used for more than video chat. You can instant message and even send and receive phone calls if you have enough credits to make calls. It's ideal of you have friends or family that may live internationally and you can contact them without having a long distance plan.